FIRST CITIZENS BANCSHARES INC /DE/

First Citizens BancShares, Inc. (BancShares) operates as a bank holding company, primarily through its banking subsidiary, First-Citizens Bank & Trust Company (FCB), which was established in 1898 ¹. The company provides a broad range of financial services to individuals, businesses, and professionals, operating an extensive network of branches and offices predominantly in the Southeast, Mid-Atlantic, Midwest, and Western United States ¹. BancShares also maintains a nationwide digital banking platform, the Direct Bank, offering deposit products to consumers ¹. As of December 31, 2025, BancShares reported total consolidated assets of $229.70 billion ¹. The company's operations have been significantly influenced by the descendants of Robert P. Holding, who continue to hold key leadership positions and a large percentage of common stock ¹.

BancShares generates revenue through a core business model that includes deposit products, loans, wealth management, and private banking services for consumer clients ¹. For commercial clients, it offers lending, leasing, capital markets, and other financial and advisory services to small and middle-market companies across various industries ¹. A notable focus is on private equity firms, venture capital firms, and commercial clients in innovation markets such as technology, life sciences, and healthcare ¹. The company also provides deposit, cash management, and lending solutions to homeowner associations and property management companies, and owns a fleet of railcars and locomotives leased to railroads and shippers ¹. Revenue streams are a mix of interest income from loans, leases, and investments, and noninterest income from various fee-based services ¹.

The company's reportable segments as of December 31, 2025, include the General Bank, the Commercial Bank, and Rail, with other financial information reported in the Corporate section ¹. The General Bank segment delivers services to individuals and businesses through its branch network and digital channels, offering deposit products, loans (primarily business/commercial loans and residential mortgages), wealth management, private banking, and fee-based services ¹. It also provides private banking and wealth management solutions to private equity and venture capital professionals and executive leaders of innovation companies, as well as deposit, cash management, and lending solutions to homeowner associations and property management companies ¹. The Commercial Bank segment focuses on lending, leasing, capital markets, and financial and advisory services for small and middle-market companies, including a full suite of commercial deposit, liquidity management, and international products ¹. This segment also serves private equity firms, venture capital firms, and commercial clients in innovation markets, and provides asset-based lending, factoring, receivables management, and secured financing services ¹. The Rail segment is dedicated to equipment leasing and secured financing for railroads and shippers ¹.

For the fiscal year ended December 31, 2025, BancShares reported net income of $2.206 billion ², a decrease of 21% from $2.777 billion in the prior year ². Net income available to common stockholders was $2.149 billion ², with diluted earnings per common share of $165.24 ². Total interest income for the year was $11.778 billion ², while interest expense was $4.964 billion ², resulting in net interest income of $6.814 billion ². The provision for credit losses stood at $514 million ². Noninterest income was $2.727 billion ², and noninterest expense was $6.056 billion ². The company's return on average assets was 0.96% ², and the net interest margin was 3.25% ². As of December 31, 2025, total loans and leases were $147.930 billion ², total deposits were $161.578 billion ², and total borrowings were $36.008 billion ². The allowance for loan and lease losses (ALLL) was $1.566 billion ³.

Comparing the fiscal year 2025 to 2024, net interest income decreased by $329 million, or 5% ². The net interest margin also saw a decline of 29 basis points, from 3.54% to 3.25% ². Noninterest income increased by $112 million, or 4% ², driven by higher rental income on operating lease equipment ($48 million) ⁴, wealth management services ($18 million) ⁴, international fees ($17 million) ⁴, and deposit fees and service charges ($11 million) ⁴. Noninterest expense rose by $321 million, or 6% ², primarily due to increases in personnel cost ($216 million) ⁴, marketing expense ($66 million) ⁴, equipment expense ($51 million) ⁴, and third-party processing fees ($38 million) ⁴. The provision for credit losses increased by $83 million, or 19% ². Total loans and leases grew by $7.71 billion, or 6% ², while investment securities decreased by $2.53 billion, or 6% ². Deposits increased by $6.35 billion, or 4% ², and total borrowings decreased by $1.04 billion, or 3% ².

During 2025, BancShares repurchased approximately $3.03 billion of its Class A common stock under the 2024 and 2025 Share Repurchase Programs (SRPs) ⁵. The company also issued $500 million of 7.000% non-cumulative perpetual preferred stock, Series D, on November 18, 2025 ⁶. In debt transactions, FCB prepaid $2.49 billion of the Purchase Money Note in December 2025, incurring a $9 million loss on extinguishment of debt ⁷. The Parent Company also redeemed $350 million aggregate principal amount of its 3.375% Fixed-to-Floating Rate Subordinated Notes due in 2030 ⁷. New debt issuances in 2025 included $600 million of 5.600% Fixed Rate Reset Subordinated Notes due in 2035, $500 million of 5.231% Fixed-to-Floating Rate Senior Notes due in 2031, and $750 million of 6.254% Fixed-to-Fixed Rate Subordinated Notes due in 2040 ⁷. On October 16, 2025, FCB announced an agreement to acquire 138 branches from BMO Bank N.A., expecting to assume approximately $5.7 billion in deposit liabilities and acquire approximately $1.1 billion in loans ⁸. The Shared-Loss Agreement with the FDIC, related to the Silicon Valley Bridge Bank (SVBB) acquisition, was terminated on April 7, 2025, with no impact to consolidated balance sheets or statements of income ⁹.

Management's strategic priorities for the upcoming period center around client focus, talent and culture, operational efficiency, and balance sheet optimization ¹⁰. The company aims to expand and grow its capabilities and products while maintaining a client-first focus and harnessing the scale of the enterprise ¹⁰. A key objective is to attract, retain, and develop associates who align with the company's long-term direction and culture, while scaling for continued growth ¹⁰. Operational efficiency is targeted through optimizing processes and systems to reduce organizational complexity and maximize productivity, and continuing to streamline systems to simplify the information technology operating environment and improve data infrastructure ¹⁰. Finally, management plans to prudently manage the balance sheet to optimize its funding and liquidity profile while driving core deposit growth and enhancing returns ¹⁰.

A significant growth area for BancShares is through strategic mergers and acquisitions, as evidenced by the pending BMO Branch Acquisition ⁸. This acquisition, announced on October 16, 2025, involves acquiring 138 branches from BMO Bank N.A. located throughout the Midwest, Great Plains, and West regions of the U.S. ⁸. FCB expects to assume approximately $5.7 billion in deposit liabilities and acquire approximately $1.1 billion in loans as part of this transaction ⁸. The transaction is expected to close in the second half of 2026, subject to customary closing terms and conditions and regulatory approvals ⁸. This expansion is anticipated to strengthen BancShares' presence in existing markets and expand its footprint into new ones ¹¹.

The company also anticipates growth in its Direct Bank, which primarily consists of savings accounts, as evidenced by the $3.02 billion deposit growth in Corporate in 2025 ¹². Furthermore, the General Bank segment saw deposit growth of $1.84 billion, mainly in its Branch Network, with money market deposits increasing ¹². The Commercial Bank segment experienced deposit growth of $1.51 billion, primarily in Global Fund Banking, with most growth in noninterest-bearing demand and money-market accounts ¹². These trends suggest continued focus on expanding deposit bases across various channels.

Operationally, BancShares is focused on optimizing its cost structure and improving efficiency. The increase in noninterest expense in 2025, particularly personnel cost ($216 million) ⁴, marketing expense ($66 million) ⁴, equipment expense ($51 million) ⁴, and third-party processing fees ($38 million) ⁴, indicates ongoing investments in talent, technology platforms, and cloud-based computing services. The company aims to streamline systems to simplify its information technology operating environment and improve data infrastructure ¹⁰. The decrease in acquisition-related expenses by $69 million in 2025 ⁴ suggests a potential moderation in integration costs from prior acquisitions.

Regarding capital allocation, BancShares has demonstrated a commitment to returning capital to shareholders through share repurchases. The Board authorized a new share repurchase program (2025 SRP) on July 25, 2025, allowing for repurchases of Class A common stock up to an aggregate amount of $4.0 billion through December 31, 2026 ⁵. As of December 31, 2025, the total capacity remaining under the 2025 SRP was $2.81 billion ⁵, and as of February 13, 2026, it was $2.37 billion ⁵. The company also issued $500 million of Series D perpetual preferred stock in November 2025 ⁶ and $400 million of Series E perpetual preferred stock in February 2026 ¹³, indicating a strategy to diversify its capital mix.

Management explicitly flagged several structural headwinds and execution risks to its growth plan. The financial services industry is highly competitive and continues to evolve due to changes in regulation, technology, product delivery systems, and consolidation ¹. Non-bank financial entities providing services previously limited to commercial banks intensify competition, operating with greater flexibility and lower cost structures ¹. Digital asset service providers are also increasingly competing for deposits and loans ¹⁴. The process of disintermediation, where consumers bypass banks for financial transactions, could lead to a loss of fee income and lower-cost customer deposits ¹⁴. Furthermore, the company's ability to attract and retain qualified personnel is critical, and competition, regulatory limitations, or increased compensation costs could adversely affect performance ¹⁵.

Geographic, regulatory, and macro factors are also identified as constraints. The company's significant presence in North Carolina, South Carolina, and California, along with expansion into the Midwest, Great Plains, and West regions, exposes it to regional economic fluctuations and natural disasters ¹⁶. Changes in domestic and foreign trade policies, including tariffs, could adversely impact customers' revenues and ability to service debt ¹⁷. The U.S. debt ceiling and budget deficit concerns could lead to financial market instability, interest rate volatility, and economic slowdowns ¹⁸. Regulatory changes, such as the proposed Basel III Endgame, could introduce additional capital requirements ¹⁹. The evolving legal and regulatory environment for AI is uncertain and rapidly changing, potentially increasing compliance costs and risks ²⁰.

BancShares faces several material risks, including strategic, operational, credit, market, liquidity, capital adequacy, compliance, and financial reporting risks. Strategically, the company is exposed to risks associated with previous and future acquisitions, such as integration difficulties, failure to realize expected benefits, and increased regulatory scrutiny, particularly as it approaches asset thresholds for higher categories of bank regulation ¹¹. Operationally, significant risks include failures in maintaining appropriate infrastructure and oversight, cyberattacks, information or security breaches, and technology outages, which could lead to service disruptions, reputational harm, and legal actions ²¹. Credit risks are inherent in lending, with potential for insufficient allowance for credit losses (ALLL) to cover actual losses, especially given concentrations in non-depository financial institutions (NDFIs) and the healthcare and technology industries ²². Deteriorating collateral values, particularly in commercial real estate, and reliance on junior liens, also pose risks ²³. Market risks include interest rate sensitivity, where unexpected changes in rates could adversely affect net interest income and economic value of equity ²⁴. Liquidity risks stem from potential deposit fluctuations and the ability to meet obligations, with the company's uninsured deposits representing approximately $61.81 billion, or 38% of total deposits, as of December 31, 2025 ²⁵. Capital adequacy risks involve maintaining sufficient capital to support growth and meet regulatory requirements, with potential for credit rating reductions impacting access to capital ²⁶. Compliance risks are heightened due to operating in a highly regulated industry, with potential for adverse regulatory action, fines, and reputational damage from non-compliance with laws related to consumer protection, data privacy, cybersecurity, and ESG matters ²⁷.

Management's message to shareholders emphasizes a commitment to four key strategic priorities: client focus, talent and culture, operational efficiency, and balance sheet optimization ¹⁰. The overall tone suggests a proactive approach to growth and risk management, aiming to expand capabilities and products while maintaining a client-first orientation and fostering a strong internal culture ¹⁰. Management is focused on optimizing processes and systems to reduce complexity and maximize productivity, including streamlining information technology and improving data infrastructure ¹⁰. A prudent approach to balance sheet management is highlighted, with an emphasis on optimizing funding and liquidity while driving core deposit growth and enhancing returns ¹⁰. The company also provided specific forward-looking statements regarding its share repurchase program, with a total capacity remaining under the 2025 SRP of $2.81 billion as of December 31, 2025, and $2.37 billion as of February 13, 2026 ⁵. Additionally, management noted that in January and February 2026, the company made additional prepayments of approximately $500 million each on the Purchase Money Note ⁷.